Hargreaves Lansdown has set the standard for telephone advice as firms build out teams working with clients via phone to better service those with smaller portfolios.
In April, Tilney became the latest wealth manager to expand its telephone advice team nabbing two hires, including Jules McBride from Hargreaves. Nutmeg announced in October it was expanding to telephone advice, while HSBC also recently expanded its telephone advice team.
Cost-effective for portfolios less than £150k
The move to offer phone-based advice is driven by client demand and commercial pressure, according to Heather Hopkins, managing director at Nextwealth. “Clients don’t always want to see an adviser face to face and sometimes their queries can be addressed by someone less senior in the organisation.
“Also, firms are struggling with profitability given the mounting regulatory burden. Many tell us that they can’t profitably service accounts with less than £100k or even £150k of investable assets. Phone based advice offers a potential solution.”
However, Gavin Fielding, editorial director at Fundscape, says it is more of a marketing strategy to increase leads. “Robo maybe fine for Isas and the basics if you are confident, but it is remote and impersonal. For some people and especially when it comes to pensions they want to know help is there when they need it.
“Tele-advice means you have a chance of getting higher value business and conversions as people get wealthier with pensions, inheritance etc.”
Clive Waller, managing director at CWC Research, says the drive is because it’s simply “much, much cheaper”.
He says: “Clients want advice when they need it, not by the calendar. Digital and phone deliver on urgency. Even complex clients who like face-to-face contact will do more online and on the phone as speed and convenience matters.”
Hargreaves leads the way
Fielding says HL leads the way in the tele-advice space. “You have to respect their ability to understand their customers, anybody can recruit some advisers and set them up in a call centre, but it needs the right sort of culture and ability to offer a good customer journey.”
HL currently has 22 advisers dedicated to this area of the business, 19 of which are Chartered Financial Planners.
Danny Cox, head of communications at Hargreaves Lansdown, says: “The telephone advice service was introduced over 10 years ago to meet a growing demand for people who wanted advice but didn’t necessarily want a face-to-face meeting. Telephone advice is about offering clients choice and convenience.
“Two thirds of clients who use our advisory services, telephone or face to face, have one off advice and don’t want an annual review.”
The rationale
Steve Sprague, head of the telephone advice team at Tilney, told Portfolio Adviser that the service was set-up around four years ago but it has been expanding recently.
Sprague says the telephone advice service allows Tilney to be able to support clients with lower levels of assets or less complex affairs, throughout the the UK and across different age cohorts.
He says: “There has been a lot of attention on the ‘advice gap’ in the UK in recent years as many firms have raised their minimum client size, finding it too costly to support clients with more modest amounts of assets on a traditional face-to-face basis. Our telephone-based team of qualified financial planners enables us to support a much wider range of clients beyond those with significant wealth.”
The wealth manager currently has 22 qualified advisers in the tele-advice space, with the team having grown by seven over the year.
He adds: “Call volumes vary and like other parts of the business, peak towards the tax-year end. The team are providing full financial advice, delivered by qualified financial planners and covering the same areas as a face-to-face adviser might deal with but delivered over the telephone, email and online.”
Robo advice vs tele-advice
Telephone advice and digital wealth management are very different, says Tilney’s Sprague.
“Robo-advice services are essentially online journeys for selecting an investment portfolio to match a risk and goal profile. Our telephone service is providing something very different.
“There is certainly room for both types of service model in the marketplace. It all comes down to what the client needs. It is also the case many clients do not want a purely online-only relationship. In fact, a number of robo-advisers have actually started to try and recruit telephone based financial planners.”
Nutmeg is one such example. Lisa Caplan, head of financial advice at Nutmeg, says: “Nutmeg’s mission has always been to democratise wealth management and when we looked at financial advice, we saw huge swathes of the population that were either unable to access high-quality financial advice, or it was too expensive, so we wanted to make financial advice more accessible.
“We’re a tech business and we’ve seen how it’s possible to make investment and wealth management more accessible to more people through use of our proprietary technology and we saw an opportunity with financial advice to do a similar thing.”
Nutmeg currently has two financial advisers working on the personalised element of financial advice: Caplan and Tom Kieldsen, as well as paraplanner Sarah Crouch.
Caplan adds: “At the moment, we don’t have any plans to introduce face-to-face advice, but we wouldn’t rule anything out in the future.”
Hybrid model is the way forward
Recent research by Octopus Investments revealed that most financial advisers (76%) believe a hybrid financial advice model will be the future, while an even greater proportion (81%) indicated that the next generation of financial advisers will have to incorporate aspects of robo-advice into their offering.
Waller says Hargreaves Lansdown has offered this model for years and Vanguard’s personal advice services in the US is also hybrid.
“They’ve found that as long as clients can speak to an adviser, they rarely do so,” he says. “Robo style platforms have discovered that the ability for the client to deal mostly online but be able to phone an adviser when the need arises is the best mix – so-called ‘cyborg’ or simply ‘hybrid’.”
“Ultimately, face-to-face will become the exception and digital the norm. Our smartphone provides the link.”
Likewise, Fielding says the hybrid approach is “the peace of mind and ability to understand the needs of the customer in a way robo advice never can”.
“We are still on robo advice 1.0 with some risk profiling tools which leads to a risk-managed portfolio that gets reviewed once a year with another risk assessment.”
